In November 2015, Indian fishermen and farmers filed a lawsuit against the International Finance Corporation (IFC) in US federal court over environmental damage from the Tata Mundra plant in Gujarat, India, a power plant that the IFC financed. In March 2016, a judge ruled that the IFC could not be sued in this case.

In August 2016, affected communities and farmers filed an appeal arguing that, under recent US Supreme Court decisions, the IFC is not entitled to absolute immunity and should be subject to suit for damage caused by the power plant. On 23 June 2017, a US court of appeals ruled that the IFC is entitled to “absolute immunity” and cannot be sued by the communities harmed by IFC projects. In July 2017, the affected communities asked a court to review the "absolute immunity" doctrine. On 26 September 2017, a US Court of Appeals ruled that it would not reconsider the immunity rule. On 22 January 2018, the plaintiffs appealed to the US Supreme Court that agreed to hear the case, thereby accepting to consider the question of whether or not international organizations such as the World Bank are immune from being sued. On 31 July 2018, the US Government, as well as nine NGOs and experts, filed amicus briefs to the Supreme Court in support of the plaintiffs, arguing that international organizations like the World Bank Group should be subject to lawsuits for damages arising out of their commercial activities.

On 31 October 2018, the US Supreme Court heard Indian villagers' appeal challenging the immunity of the IFC under US law.

[Last week,] the U.S. Supreme Court heard arguments...on whether the World Bank and other international organizations enjoy absolute immunity from U.S. lawsuits...

The legal case hinges largely on a 1945 law, passed to apply to the United Nations and other international bodies, which granted these organizations “the same immunity from suit” as foreign governments...The plaintiffs argued that loans from the IFC should be considered as commercial activities that fall outside the protection of sovereign immunity...

The case centered on the...Tata Mundra power plant, built by the...the Tata Group and backed by $450 million in loans from the IFC...The IFC refused to consider them as “project-affected people” entitled under its rules to be consulted about the project and compensated for any damages

Ultimately, even if the Supreme Court decides in favor of the fishing community, it could have limited impact. The high court’s ruling will determine only if the lawsuit may proceed in U.S. lower courts, and, if it does, those courts could decide that the plaintiffs have not proven their claims or that the IFC’s actions in the Tata Mundra case are protected even if its immunity is not absolute...

The U.S. Supreme Court on Wednesday appeared unlikely to revive a lawsuit by villagers in India seeking to hold a Washington-based international financial institution responsible for environmental damage they blame on a power plant it financed. The justices heard an hour of arguments in an appeal by the villagers of a lower court ruling that the International Finance Corp, part of the World Bank Group, was immune from such lawsuits under U.S. law. Several justices expressed skepticism toward the villagers’ legal argument, signaling the court was likely to back the IFC. A ruling is due by the end of June...

...The IFC expressed concern that a ruling against the organization could invite similar lawsuits targeting it and other international development banks. Justice Stephen Breyer appeared to sympathize...Justice Elena Kagan said the IFC’s interpretation of the scope of immunity appears to “make a lot more sense.”...President Donald Trump’s administration backed the plaintiffs, saying international organizations should not be given anything more than the limited immunity foreign countries are accorded...One of the nine justices did not participate in the case...

"Supreme Court Preview: Is the World Bank Group Above the Law?", 29 Oct 2018

...The case, Budha Ismail Jam et al. v. International Finance Corporation (IFC), will be argued on Wednesday [31 October] before the U.S. Supreme Court...to decide if international organizations such as the IFC are absolutely immune from lawsuits in U.S. courts...

The petitioners are members of a fishing and farming community in India, represented by EarthRights International...

The suit arises out of the IFC’s reckless lending for a disastrous coal-fired power plant project that the IFC helped build on the coast of Gujarat, India.

In addition to being a financial disaster, the project has destroyed natural resources...

For years, the IFC has branded itself as a global leader in responsible business...[but] the IFC has not always practiced what it preaches, occasionally pursuing investments despite knowing quite well that they will bring enormous harms to local communities...

...[O]n October 31, Chief Justice John Roberts will announce Jam’s name as the lead plaintiff in a lawsuit that could determine whether organizations like the World Bank Group’s International Finance Corporation (IFC) can be held responsible for harming the very people they’re supposed to be lifting from poverty...In 2015, Jam and MASS became plaintiffs—along with two other fishworkers...and a farmer who says his crops have been harmed—in a lawsuit against the IFC...The IFC...didn’t dispute the facts; it simply asked the court to throw out the case, saying it enjoyed “absolute immunity” from lawsuits...That’s the question before the Supreme Court in October: whether an ambiguous World War II–era statute really intended to give organizations like the IFC and the World Bank a blanket protection from lawsuits...[T]here’s another set of plaintiffs—Honduran farmers...awaiting the Supreme Court’s decision in Jam v. IFC...Even if they prevail at the Supreme Court, however, that decision will only address their right to sue. The lawsuit will then have to be litigated on its merits. But a favorable ruling for Jam on the immunity question could make the IFC more vigilant about protecting impoverished communities affected by its financial decisions. And it could give those communities another recourse...

On Tuesday, nine NGOs and experts filed an amicus brief before the US Supreme Court in support of the Indian fishing communities and farmers who are challenging the International Finance Corporation (IFC)'s claim to absolute immunity in Jam v. IFC. The amici call for the Supreme Court to reverse the lower court's decision, arguing that the decision to uphold the IFC's immunity undermines its mission and its accountability system...In support of the communities, NGOs and experts stress that absolute immunity not only infringes on the right to remedy, it also undermines the IFC's ability to carry out its own objectives. Providing redress to communities harmed by IFC projects is critical to the mission of the IFC to reduce poverty and support development that does not harm the people or environment. The IFC claims losing immunity will hurt its business; however, the amici argue that limiting immunity will actually help...The US Government, a group of bipartisan members of Congress, and international law professors have also filed amicus briefs supporting the reversal of the lower court's decision.

"U.S. Government Opposes “Absolute” Immunity for World Bank Group in Brief to SCOTUS", 1 Aug 2018

...[T]he U.S. Government urged the U.S. Supreme Court to reverse a lower court decision holding that international organizations like the World Bank Group are entitled to “absolute immunity” from lawsuits in U.S. Courts...[T]he Government’s brief argues...that such organizations...should be subject to suit for injuries arising out of their commercial activities. The brief supports the Plaintiffs in Jam v. International Finance Corporation (IFC), who with EarthRights International (ERI) filed suit against the IFC...for its role in funding a destructive power plant project in Gujarat, India that has devastated their community and the local environment. The IFC has not denied that the harms have occurred, instead it has simply argued that it is immune and cannot be held liable...

The Plaintiffs, filed their opening brief last week explaining why the D.C. Circuit’s holding is wrong and the IFC is not immune from suits for commercial activity. The US Government’s...adds substantial weight to that argument...A number of other amicus curiae...briefs were also filed this week, including briefs by a bipartisan group of a Members of Congress, International Law Scholars, and environmental, human rights, and development-focused advocacy organizations that have experience working with the IFC, all arguing that the D.C. Circuit’s absolute immunity holding is wrong and should be reversed...

The IOIA provides that international organizations “enjoy the same immunity from suit...as is enjoyed by foreign governments.” 22 U.S.C. 288a(b). The text, structure, and history of the Act, as well as Executive Branch practice and related congressional enactments, all confirm that the jurisdictional immunity afforded by the Act is the jurisdictional immunity currently enjoyed by foreign states and as it might be modified over time, not as it existed when the Act was enacted in 1945. The court of appeals’ contrary determination is incorrect, would present practical difficulties for federal courts, and is not justified by the policy concerns that respondents invoke.

The D.C. Circuit is incorrect that the [International Organizations Immunities Act] IOIA gives international organizations absolute immunity from suit. Rather, by its plain terms, the IOIA tracks the rules established in the FSIA...The IOIA’s “same immunity” provision does not place international organizations uniquely beyond the reach of the law. Instead, it incorporates the current law of foreign sovereign immunity, which is governed by the FSIA...

Author: Carly Dooley, Marie Mekosh, Center for International Environmental Law

When a project funded by the World Bank and other development banks harms local communities, where can they turn to?...[I]n the US, these organizations have absolute legal immunity, meaning that they can’t be sued even in cases of explicitly illegal behavior...[F]or the first time, the US Supreme Court will address international organizations’ immunity from harmful or illegal conduct. This case could pave the way for communities around the world to finally achieve meaningful relief from the damage international institutions leave behind...Indian fishing communities and farmers are challenging the IFC, a branch of the World Bank, for its role in the controversial Tata Mundra coal-fired power plant...In 2008, the IFC provided India with $450 million in loans to construct the Tata Mundra Power Plant...When the IFC’s own independent accountability mechanism (the CAO) investigated the project, it...denounced the bank’s failure to ensure that the project wouldn’t harm those it was ultimately meant to help...[T]he IFC largely rejected the CAO’s findings and failed to implement any plans that would remedy the harms to the communities...Continuing to grant “absolute immunity” disregards the effects of World Bank Group projects and actions on local communities, the very people projects are supposed to benefit...The IFC’s rigid adherence to this immunity only raises questions about whether they are truly evaluating projects in line with their stated goal of “helping to reduce poverty and improve people’s lives.” We hope that the Supreme Court’s decision to hear the case points not only to a recognition of the communities devastated by one power plant in India, but to all the communities impacted by development projects around the world...

Site tools

Follow us

Disclaimer: Business & Human Rights Resource Centre and its collaborative partners take no position on the diverse views presented in linked material by the various commentators, organizations & companies. As with any database, we cannot guarantee the factual accuracy of all the articles & reports we make available.

By continuing to use the site, you agree to the use of cookies. more information

/*

/*

/*

The cookie settings on this website are set to "allow cookies" to give you the best browsing experience possible. If you continue to use this website without changing your cookie settings or you click "Accept" below then you are consenting to this.